Sharp reportedly close to bailout deal

SAN FRANCISCO—Japan's troubled Sharp Corp. is expected to get approval as early as Thursday (Sept. 27) for loans worth as much as 210 billion yen (about $2.7 billion), according to a report by the Reuters news service.

The report, which cites an unnamed source at one of Sharp's main lenders, says the loan deal also includes a plan that commits Sharp to return to profit, including additional layoffs.

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Sharp (Osaka, Japan) has been seeking financial support to implement a restructuring plan. The company had been trying since March to forge a partnership with Hon Hai Precision Industry Co. Ltd. (also known as Foxconn), the world's largest contract manufacturer and a supplier of manufacturing services to consumer electronics giant Apple. But a bail-out plan that included investment from Hon Hai in return for a transfer of LCD technology has become drawn out as Sharp's share price has collapsed.

Sharp has been hit hard by a slump in the sale of liquid crystal displays generally and LCD televisions in particular and is now expected to forecast a loss of about 300 billion yen (about $3.8 billion) for the year ending March 31, 2013. The company made a net loss of 138.4 billion yen (about $1.8 billion) in the first fiscal quarter, which ended June 30.

According to the Reuters report, Sharp has already submitted a restructuring plan that outlines how it can turn a profit in the six months beginning Oct. 1. The company is committed to repay short-term commercial paper loans worth as much as 360 billion yen (about $4.6 billion), according to the report.

Earlier this month, Reuters reported that Sharp mortgaged nearly all of its Japanese factories and offices, including one making liquid crystal displays for Apple products, to secure loans.Last month, Sharp asked its labor union to agree a 7 percent cut in wages for the general work force and imposed a 10 percent cut in managers' salaries. In August, Sharp announced plans to cut 5,000 jobs before the end of the fiscal year in March 2013. According to the Reuters report, Sharp plans to raise the total of job cuts to about 11,000.